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Study Session - West Valley Solid Waste ManagementINFORMATIONAL REPORT ON WEST VALL SOLID WASTE MANAGEMENT AUTHORITY BOARD PROCESS FOR COLLECTION AND DISPOSAL CONTRACT PROCUREMENT,AND RATE ADJUSTMENTS DATE: TO: FROM: SUBJECT: COUNCIL AGENDA REPORT February 10,2005 MAYOR AND TOWN COUNCIL DEBRA 1.FIGONE,TOWN MANAGER MEETING DATE:2/22/05 .~, ',.;'; STUDY SESSION RECOMMENDATION: For information only. BACKGROUND: The Town contracts for solid waste collection and disposal services through the West Valley Solid Waste Management Authority (Authority),a j oint powers agency consisting ofthe following member municipalities:Town ofLos Gatos,City of Campbell,City of Monte Sereno,and City of Saratoga. The Authority was formed in 1997,at which time all four municipalities assigned their refuse collection,disposal, residential curbside recycling collection,and residential yard waste collection agreements to the new Authority.In consequence,the Authority now holds contracts with Green Valley Disposal Company to provide these services.It is the Authority's role to manage the contracts and the services provided under them,including monitoring service levels,setting residential and commercial collection rates,and negotiating new contracts as appropriate. The Authority is staffed by a contract Executive Director,Scott Hobson of Hilton Farnkopf & Hobson,LLC.The Authority Board of Directors includes one Council representativefrom each agency;Councilmember Glickman is the Los Gatos Boardmember. DISCUSSION: The purpose of this report is to provide information on the Authority's process for procuring new PREPARED BY:Regina A.Fal'~or of Community Services N:\CSD\TCRPTS\SWM contracts rates ss.wpd .K..l\~~L Reviewed by:KAssistant Town Manager =t)lfOOTown Attorney __Clerk Administrator 6c,Finance __Community Development Revised:2/10/05 10:54 am Reformatted:5/30/02 PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT:INFORMATIONAL REPORT ON WEST VALLEY SOLID WASTE MANAGEMENT AUTHOmTY BOARD February 10,2005 waste collection and disposal contracts,and for adjusting residential and commercial collection service rates.Executive Director Hobson will be present at the Council study session to verbally present this infonnation,and to answer any questions. Contract Procurement Process Attached (Attachment 1)is an agenda report from the most recent Authority Board meeting,which provides background infonnation and strategy regarding the procurement of new collection and disposal contracts.As shown in the first attachment to that report,the Authority currently holds a number ofcontracts under which collection,disposal,recycling,and yard waste services are provided to local residents and businesses.All of these contracts have been negotiated to tenninate on February 28,2007.Due to the complexity of the issues involved,the Authority must begin now in order to have new contracts in place for March 2007. At its February 3 meeting,the Authority Board approved the following process,as outlined in Attachment 1: ~Appoint a Board subcommittee to manage the contract procurement process ~Negotiate on a sole-source basis with Guadalupe Rubbish and Disposal Company for landfill disposal services Obtain competitive proposals for waste collection,recycling,and yard waste services through a Request for Proposals process Rate Adjustment Process The Authority contracts with Green Valley Disposal Company to provide waste collection services to Los Gatos residents and businesses under the Refuse Collection Services Agreement.This agreement states the services that are to be provided,and outlines a process for setting the rates for those services.Under the agreement,Green Valley may submit a rate adjustment request to the Authority by March 1 of each year,for new rates effective July 1.The Authority then adopts the rates for Los Gatos residents and businesses. Collection rates for Los Gatos were last adjusted in February 1995,previous to the existence of the Authority.Adjustments requested by Green Valley for 1996 received extensive reviewby the Town and the other West Valley cities,in order to achieve fair and reasonable rates.In response,Green Valley sued the cities collectively for breach of contract.The negotiated settlement resulted in the fonnation ofthe Authority,and anew Refuse Collection Services Agreement for each municipality. The favorable tenns ofthe new Refuse Collection Agreement resulted in a small surplus ofrevenues over expenses for the first few years,which were used to offset increasing costs in subsequent years. However,these funds have now been substantially depleted.The Authority expects a rate adjustment request to be submitted by Green Valley this March 1.The request will be brought to PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT:INFORMATIONAL REPORT ON WEST VALLEY SOLID WASTE MANAGEMENT AUTHOmTY BOARD February 10,2005 Council at its April 18 meeting,in order for Council to provide direction to its Authority representative,Councilmember Glickman.The Authority Board will take action on the rate request at a public hearing scheduled for May 5.If approved,new commercial rates would be effective July 1,and new residential rates would be effective August 1. It is expe~ted that the three other member municipalities of the Authority will also have rate adjustments effective this summer.The amount of these adjustments are not yet known,and will differ by municipality,according to the municipalities'strategic use of surplus revenues and other factors.More information about the rates of the other municipalities will be available for Council at the April 18 meeting.. Town staff has developed a public information strategy to-educate the community about the rate request,and the potential for a rate increase.Information will be provided through Green Valley's regular customer newsletter,the Town newsletter the "Los Gatos Vista,"the Town's website,and local media. CONCLUSION: The Town's representative to the Authority,Councilmember Glickman,will remain fully informed about the contract procurement and rate adjustment processes,and will report back to the full Cou,ncil as warranted.The rate adjustment request will be brought to Council as an information item at its April 18 meeting. ENVIRONMENTAL ASSESSMENT: The recommended action is not a project defined under CEQA,and no further action is required. FISCAL IMPACT: No fiscal impact will result from the r~~ommended action. Attachments: 1.West Valley Solid Waste Management Authority agenda item;February 3,2005 Distribution: Scott Hobson,Hilton Farnkopf &Hobson,LLC AGENDA ITEM No. MEETING DATE: Attachment 1 3 Em3RJIARX 3 ZOOS WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY Date:January 25,2005 AGENDA REPORT To:West Valley Solid Waste Management Authority Board From:Executive Director Subject:Procurement Process RECOMMENDED ACTION Approve a procurement process for a disposal contract and a comprehensive collection contract and establish a Board subcommittee for procurement process. OISCUSSION The purpose of this report is to: •provide some background information regarding collection and disposal activity within the Member Agencies; •provide a summary of the current collection and disposal agreements;and, •recommend an approach and process for the procurement of new collection and disposal services effective March 1,2007. Background . The following timelirie summarizes a few of the major milestones in the history of the relationship between Green Valley Disposal Company and the Member Agencies. Summary Timeline Pre-1990 1918 -Green Valley Disposal Company formed to collect slop from area restaurants to feed pigs. 1920s-1930s -Company expanded to collect other garbage,which was disposed in a landfill located at the present-day Vasona Park. WEST V ALLEY SOLID WASTE MANAGEMENT AUTHORITY Page 20f6 1940s -Land purchased for the present-day Guadalupe Landfill. AGENDA REPORT February 3,2005 1950s-1980s -Garbage collected from residents and businesses under informal year-~o­ year agreements. 1983 -Company entered into formal,20-year agreements with each of the Member Agencies for collection and disposal of garbage. Post-1990 1990 -Company awarded a 5-year curbside recycling collection agreement (separate, yet identical agreements with each Member Agency)through a competitive procurement process. 1995 -Company awarded a new 8-year curbside recycling collection agreement (separate,yet identical agreements with each Member Agency)through a competitive procurement process. 1995 -Company awarded an 8-year residential yatd waste'collection agreement (separate,yet identical agreements with each Member Agency)through a competitive procurement process. 1995 -Company sues Member Agencies for breach of contract over rate dispute. '1997 -Company and Member Agencies settle lawsuit,entering into new,10-year refuse collection and disposal agreements. 1997 -Member Agencies form the West Valley Solid Waste Management Authority and assign their refuse collection,disposal,residen,tial curbside recycling collection, and residential yard waste collection agreements to the new Authority. .1999 -Member Agencies negotiate a 3-year,8-month commercial mixed paper collection agreement with Company. 2002 -Member Agencies extend the curbside recycling collection,residential yard waste collection and commercial mixed paper collection agreements for four years in exchange for adding all plastic containers,plastic film and household dry cell batteries to the curbside recycling program and processing C&D drop boxes through the Guadalupe C&D :MRF. As shown,GVDC has provided collection services to the Member Agencies for over eight decades under a variety of informal and formal agreements. WEST V ALLEY SOLID WASTE MANAGEMENT AUTHORITY Page 30f6 AGENDA REPORT February 3,2005 Current Agreeme"nts When the Authority was formed in 1997,the Member Agencies assigned each of their collection and disposal agreements to the Authority.Thus,the Authority is currently responsible for 4 collection agreements,4 disposal agreements,4 recycling agreements, and 4 yard waste collection agreements.Attachment I,Agreement Summary,shows that all of the current agreements have been negotiated to terminate on February 28, 2007.As shown in the Summary,the recycling agreements have been amended over time to expand the collection services provided by GVDC. Procurement Approach,Scope,and Process Proposed Approach For reasons discussed below,I recommend that the Authority bifurcate the collection and disposal procurement processes.A long-term disposal contract should be negotiated on a sole-source basis with Guadalupe Rubbish and Disposal Company (Waste Management).Then,a new comprehensive collection agreement should be obtained through a competitive Request for Proposals.If the Authority is unable to negotiate a satisfactory disposal agreement with GRDC,disposal services could be added to the competitive RFP before it is issued. Rationale for Sole Source Disposal Negotiations The Authority is a significant customer for the Guadalupe landfill.According to reports filed with the CIWMB,the Guadalupe landfill received approximately 184,OO()tons in 2003.Of this total,the Authority contributed just over 41 %.(The City of San Jose is the largest single contributor,at just over 47%,but three~fourthsof their material is" classified as "alternative daily cover,"not disposal tons.)Due to the significance of the Authority's annual tonnage,Waste Management should be motivated to retain the Authority's tons.Further,including planned expansion at the landfill,Guadalupe has sufficient capacity to provide long-term disposal services to the Authority. Other Bay Area landfills would probably require a transfer station (at a significant capital investment)to be located in or near the Autlwrity's boundaries.Although there are a number of landfills in the Bay Area,all are located farther from the Authority and most do not have sufficient capacity to provide long-term di&posal for the Authority.The nearest landfill with sufficient long-term capacity is Kirby Canyon,located between San Jose and Morgan Hill,but it is also owned by Waste Management.Another landfill with sufficient capacity is Allied Disposal's Ox Mountain landfill in San Mateo County,but it would require a transfer station due to the haul distance.While these and other landfills may be alternatives,they should be considered secondary to the Guadalupe landfill in the Authority's "backyard." WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY Page 40[6 AGENDA REPORT February 3,2005 Rationale for a'Competitive Collection Request for Proposals The Authority has a fiduciary responslbility to ensure that its ratepayers are receiving modern services at market rates.Neither the Member Agencies nor the Authority has ever sought competitive propos$for collection services.Over the last seven years of the current agreement,collection and processing technologies have changed in significant ways.Other competitive procurements in the Bay Area have resulted in significant ilnprove:m.ents in s~rvifes provided,reduction in collection rates,or both.In addition, during the term of the current agreements,GVDC ownership has changed hands from local,private owners to the largest publicly-traded waste collector in the world.The expiration of the current agreements provides an opportunity to ensure that services and rates reflect current market conditions. The new colle.ction.contractwiU likely require a significant capital investment.The Board has .expressed.an interest in making significant changes in collection and processirig methods,recyclable materials,and other services.In light of these desired changes, GVDC will most likely be.required to replace a significant portion of its collection vehicles and make other capital investments.This increases the competitiveness of other potential proposers since all hall.1ers will be required to make a similar investment in new capital. ~. There is likely to be significant competitive interest in.the Authority's collection activity.By separatin.gthe disposal contract from the collection contract,the Authority can "level the playing field"for the collection contract and increase the number of companies that can compete for the collection contract.Besides Waste Management,haulers that have significant collection operations in the local area include GreenTeam,Norcal,Bay Counties Waste Services,and Allied.In addition,Republic has proposed on a few recent collection procurements. Proposed Scope Disposal Cpntract The disposal contract '¥ill include requirements for long-term disposal,processing of C&D debris,~d composting of food and.yard waste.Detailed requirements will be developed for approval by'the Board prior to the negotiations. Collection Contract The collection contract will include requirements for automated collection of refuse, fully-commingled recyclables,and co:m.mingled food and yard waste.The Board will have an opportunity.to review the detailed scope of services,Request for Proposal,and collection contract prior to its issuance. WEST V ALLEY SOLIn WASTE MANAGEMENT AUTHORITY Page 50f6 AGENDA REPORT February 3,2005 -j I Proposed Protes"s· Preliminary Schedule Attachment 2 summarizes tentative dates and timeframes for both the proposed disposal negotiations and the competitive collection services procurement.There are several items worth noting: •The disposal negotiations are scheduled to begin in March and conclude by June 2005. •The collection services procurement will commence with the development of a detailed scope of services in July 2005/with public input through a series of workshops in August and September 2005. •The Request for Proposals will be issued in December 2005/with proposals due March 1/2006. • A final collection contract will be executed in July 2006/giving the winning proposer 8 months to order equipment and perform other transition activities. •During 2005 and the first half of 2006/the Board will hold several Special Board Meetings in addition to the Regular Board Meetings to review progress and:; approve intermediate documents associated with the procurement. Other Process Considerations There are a few other items related to the process that warrant discussion: •The new contracts will be executed by the Authority/in accordance with the Joint Powers Agreement.Thus/any workshops or meetings with the Member Agencies/Councils will be for informational purposes only -Councils will not be asked to approve the final contracts. •Proposers will be invited to.present their proposals to the Board so that Board members will have the opportunity to ask questions directly of the proposers. •Proposers will be asked to not contact Board members during the process and Board members will be asked to report any contact with potential proposers to the full Board. Proposed Board Subcommittee As noted above/the procurement process will take almost 18 months.During that time/Authority staff,Member Agency staff/and HF&H consultants will meet regularly to discuss progress/review draft documents/and negotiate agreements for full Board WEST VALLEY SOLID WASTE MANAGEMENt AUTHORITY Page 60/6 AGENDA REPORT February 3,2005 approval.Due to the number of meetings and activities that must be completed during this time,I recommend that a subcommittee of the Board be formed to periodically meet with the staff and consultants to monitor the process and review draft doculi1.ents.The subcom.mittee would streamline the process and lessen the burden on the full Board throughout the process.Other Board members will be provided detailed updates.on the progress of the procurement at the Regular and Special Board meetin.gs in 2005 and 2006. DOCUMENTS ATTACHED Attachment 1·-'Agreement Su,mmary Attachment 2 -Preliminary Procurement SChedule FISCAL IMPACT None. L.SCott Hobson Executive Director West Valley Solid Waste Management Authority Agreement Summary ,\grl'l'llll'l1 t Effl'l'th l'Un te Terlllinatioll Date E\tl\l1siol1 Options Pu rJlose Waste Disposal July 1,1997 February 28,2007 None Provides for disposal ofMSW at thy Guadalupe Landfill " Refuse Collection July 1,1997 February 28,2007 None Provides for collection ofMSW Services Assignment,Assumption April 2,1998 N/A N/A Assigns the Refuse Collection,Waste &Consent Agreement Disposal,Recycling Services and Residential Yard Waste Services Agreements to the JP A and defines rights retained by the Member Agencies First Amendment to September 17,N/A N/A Establishes performance standards Refuse Collection Services 1998 thresholds Agreement Second Amendment to June 15,2000 N/A N/A Changes GVDC's fiscal year Refuse Collection Services Agreement Page 1 of2 :~ ,\gn'(,IllC'nt Eff{'cth C'Date Termination Hate Extellsioll Options PurposC' Recycling Services February],1995 February 28,2007 None Provides for the collection of recyclable materials from residential and commercial accounts First Amendment to July 1,1998 N/A N/A Clarifies that rate payers are " Recycling Services responsible for payment,not Member Agreement Agencies Second Amendment to July 28,1998 N/A N/A Adds oil filters to curbside recyclable Recycling Services materials Agreement Commercial Mixed Paper July 1,1999 February 28,2007 None Provides for the collection of mixed Recycling ,.- paper from commercial accounts ,Commingling of December 16,N/A N/A Allows the commingling of Commercial Mixed Paper 1999 commercial mixed paper and and Cardboard Recycling cardboard for recycling purposes Services Agreement Third Amendment to January 30,2002 N/A N/A Extends term of agreements to Recycling Services February 28,2007,expands the Agreement recyclable materials collected at the curb,and initiates C&D material sorting at Guadalupe Residential Yard Waste February 1,1995 February 28,2007 None Provides for the collection of yard Services debris from residential accounts FirstAmendment to July 1,1999 N/A N/A Clarifies that rate payers are Residential Yard Waste responsible for payment,not Member Services Agreement Agencies Second Amendment to January 30,2002 N/A N/A Extends term ofagreements to Residential Yard Waste February 28,2007 Services Agreement I Page 2 of2 Attachment 2 West Valley Solid Waste Management Authority Solid Waste and Recycling Services Procurement Process Timdine Orange =PAC meetings Green =Authority Board meetings Blue =Negotiation milestones Red ="Red letter"days (contract execution,RFP issuance) Febrnary 3 Anthority Boord l\'Ieeting \ i Obtam agreement on the proposed approach and process for landfill, collection,and recycling contracts. February 3 PAC meeting Review proposed schedule and process for landfill contract negotiations. Appoint negotiation team members• February .Landfill Negotiations HFH Procurement Specialists will prepare draft disposal agreement for negotiations. I February 15 Campbell City Council Workshop Provide background information on West Valley Solid Waste Management Authority,and summarize existing contracts.Discuss approach and process for landfill,collection,and recycling contracts. February 16 Saratoga City Council Meeting Provide background information on West Valley Solid Waste Management Authority,and summarize existing contracts.Discuss approach and process for landilll,collection,and recycling contracts. February 22 Los Gatos TOfl Council Workshop Provide background information on West Va.lley Solid Waste Management C:\DOCUMENTS AND SE'ITlNGS\L.SCOTT HOBSON\MY DOCUMENTS\HFH\CLlENTS\WVSWMA\BOARD MEETINGS\2-3..QS BOARD MEETING\3-200S..Q6 CONIRACTS TlMELlNE-ATTACHMENT.DOC Authority,and summarize existing contracts.Discuss applt'Oach and process for landfill,collection,and recycling contracts.Give overview of history of coRRection rate adjustments,and of upcommg rate adjustment process. February 22 Monte Sereno City Council Meeting Provide background information on West Valley Solid Waste Management Authority,and.summarize existing contracts.Discuss approach and process for landfi.lR,collection,and recycling contracts. Marchi March Specnal Authority Board Meeting Board reviem and approves draft disposal agreement or s1lJlmmary of key rD.gllits and oblligations. Landflll Negotiations Negotiation Team will commence bi-weekly negotiations with Waste Management. April Landfill Negotiations Negotiation Team continues hi-weekly negotiations with Waste Management. April 7 PAC Meeting Review packet for May 5 Authority Board meeting,statns of landfill negotiations. May Landfill Negotiations Negotiation Team continues hi-weekly negotiations with Waste Management. MayS June 2 Authority Board Meeting Board approves new conIectJion rates,effective July 1. Special Authority Board Meetilllg Board reviews and approves negotiated disposal agreement. C:\DOCUMENTS AND SETTINGS\L.SCO'IT HOBSON\MY DOCUMENTS\HFH\CLlENTS\WVSWMA\BOARD IvlEETINGS\2-3-05 BOARD IvlEETING\3-2005-06 CONTRACTS TIMELINE-ATTACHIvlENT.DOC June 2 ·Execute Waste Disposal Contract On behalf of WVSWMA,Executive Director executes new Waste Disposal Contract,which will provide for disposal of waste at Guadalupe Landfill. Contract term begins March 1,2007. July Collection Procurement HFH Procurement Specialists draft preliminary Summary of Proposed Services and Key Terms ofRFP and Franchise Agreement. JulyS August AUgllst4 PAC Meeting Review packet for August 4 Au.thority Board meeting.. Collection Procurement HFH Procurement Specialistscontinne drafting preliminary Summary of Proposed Services and Key Terms of RFP and Franchise Agreement and conduct workshops with Councils,commercial generators,mUltifamily generators,residential generators,etc. September Collection Procurement Continue workshops with Councils,commercial generators,multifamily generators,residential generators,etc. October 7 PAC Meeting Review packet for November 3 Authority Board meeting.• November:3 JPA Board J\1leeting Board reviews,modifies,and approves Summary of Proposed Services and Key Ter.ms ofRFP ud Franchise Agreement. C:\DOCUMENTS AND SETTINGS\L.SCOTI'HOBSON\MY DOCUMENTS\HFH\CLIENTS\WVSWMA\BOARD :MEETINGS\2-3-oS BOARD :MEETING\3-2005-06 CONTRACTS TIMELINE-ATI'ACHMENT.DOC November Collection Procurement' HFH Procurement Specialists draft RFP and Franchise Agreement. December 1 Special Autholl'ity Board Meeting Board reviews,modifies,and approves RFP and Franchise Agreement for issuance. December 1 Issue Collection and Recycling Services Request For Proposals RFP is issued,requesting proposals for refuse collection,recycling,and residential yard waste services.Proposals are due March 1. January 6 PAC Meeting Review packet for February 2 Authority Board meeting.• February 2 Authority Board Meeting March 1 March Submission of Proposals Collection Procurement HFH Procurement Specialists conduct proposal evaluation,tour of facilities, and reference checks. April COllection Procurement Presentation of proposals by Companies. April 7 May 4 PAC Meeting Review packet for May 4 Authority Board meeting.. Authority Board Mootmg Executive Director recommends Company(ies)for negotiations.Board provides direction to Negotiating Team. C:\DOCUMENTS AND SETI'INGS\L,SCOTI HOBSON\1.1Y DOCUMENTS\HFH\CLIENTS\WVSWMA\BOARD MEETINGS\2·3-DS BOARD MEETING\3-200S-D6 CONTRACTS TIMELINE-ATIACHMENT.DOC June! July 6 Special Authority Board Meeting Boord reviews resultl!l of diredimJl from 1\'lay Board Meeting. Board review§~uJ!.d approve§negotiated Collection and Recycling Services Agreement. Execute Collection and Recycling Services Agreement On behalf ofWVSWMA,Executive Director executes new Collection and Recycling Services Agreement,which will provide for collection of waste and recyclables.Contract term begins March 1,2007. July Collection Procurement Company places equipment orders. August- February March 1 Collection Procurement Company continues implementation,including public education activities. Begin New Collection and Recycling Services New contracts for refuse collection,recycling,and residential yard waste services become effective. C:\DOCUMENTS AND SETIINGS\L.SCOTT HOBSON\MY DOCUMENTS\HFH\CLIENTS\WVSWMA\BOARD :MEETINGS\2-3-D5 BOARD 1vJEETING\3-200S-06 CONT.RACTS TIMELlNE-ATTACH:MENT.DOC